A Lot of Love in Las Vegas Lately

[or alternatively, "Anything You Can Trademark, I Can Trademark Better."]

Earlier this year, as local Las Vegas hotel-casino chain Station Casinos was emerging from bankruptcy, it made a large splash about its new marketing campaign focusing on the locals market in Las Vegas and embracing the marketing slogan WE LOVE LOCALS (news story on the rebranding here).

So what did rival hotel-casino South Point decide to do? Came up with its own marketing slogan that not only is able to take advantage of the notoriety developed by Station Casinos in its LOVE mark, but able to clearly distinguish itself from Station Casinos at the same time (South Point's "Love" website here).

Clever comparative marketing (if you ask me) -- I wonder how Station Casinos feels about sharing the love.

Golden Nugget's Cybersquatting Campaign

GNLV, Corp., the company which owns the Golden Nugget Hotel & Casino in downtown Las Vegas (as well as Golden Nuggets in Laughlin and Atlantic City), continues its campaign to go after cybersquatters. After a two year lull of filing any type of cybersquatting lawsuits, GNLV has now filed five since April 27, 2011. [Ed.—Is this perhaps a sign of the improving economy that a gaming company is willing to invest the money to pursue such lawsuits in order to obtain (and/or prevent others from using) domain names of questionable value?]

In late April, GNLV Corp sued German resident Luca Mueller over the domain golddennugget.com (with an extra “d” in the spelling of Golden) which GNLV alleged linked to an online gambling site. See GNLV, Corp. v. Mueller, Case No. 11-cv-00663 (D. Nev. Filed April 27, 2011). (VegasInc article here.) Later in May, GNLV Corp. sued Kanter Associates over the domain name thegoldennuggett.com (with an extra “t” in the spelling of Nugget) which GNLV alleged linked to a travel reservation website. See GNLV, Corp. v. Kanter Associates SA, Case No. 11-cv-00827 (D. Nev. Filed May 20, 2011). (VegasInc article here.)

On May 31, 2011, GNLV filed three more cybersquatting lawsuits. The first lawsuit against Harald Ebert relates to the domain name www.goldennugget.info, which GNLV claims is linked to a website which offers “links to many of the same wagering games that are offered at Plaintiff’s casino resorts, such as Blackjack, Poker and Slots.” See GNLV, Corp. v. Mueller, Case No. 11-cv-00875 (D. Nev.). The second lawsuit against Marco Eckstein relates to the domain name www.golden-nugget-jackpot.com, which GNLV claims is linked to a website which offers “links to many of the same wagering games that are offered at Plaintiff’s casino resorts, such as slots.” See GNLV, Corp. v. Eckstein, Case No. 11-cv-00878 (D. Nev.). The third lawsuit against Hilary Moore involves the domain name www.seventysevengoldennuggets.com. See GNLV, Corp. v. Moore, Case No. 11-cv-00873 (D. Nev.). As for why GNLV can claim that the registration of this last domain name, which would be perceived by almost anybody as “77 Golden Nuggets” and not likely associated with GNLV’s GOLDEN NUGGET mark, constitutes cybersquatting? It would be because, according to the complaint, the domain name is linked to “a site offering a direct link to the Golden Nugget resort-hotel travel and reservation services, including a direct link to Plaintiff’s property located in Las Vegas, Nevada.” [ed.—might’ve been an easier case to defend had Defendant used the website in connection a gold mining business].

Of course, while I didn’t review the particular website printout exhibits attached to each complaint, a quick visit to each of the above domain names shows that they are your typical “landing page” offering various pay-per-click (“PPC”) generated ads (some of which may, as GNLV alleges, go to websites offering “the same wagering games offered by Plaintiff’s casino resorts” or to “resort-hotel travel and reservation services”). Are any of these particular websites truly causing economic harm to GNLV? Highly doubtful. So why is GNLV spending money filing lawsuits to go after domains that don’t really have much direct value for GNLV (and are certainly not diverting any business to GNLV’s own hotel/casino)? Perhaps simply because it can . . . and because it’s not as costly as you might think

When one considers that the minimum cost that a trademark owner would incur to file a domain name arbitration action under the UDRP is around $3000 (including fees paid for the arbitrator) and with an uncertain outcome (as anybody who has been involved in UDRP arbitrations will tell you), these lawsuits are a much much more cost effective way for a company to obtain possession of these domain names ($300 lawsuit filing fee, $100 bond, and maybe around $500-$1000 per case for attorneys fees and costs (assuming great economies of scale), since most of the documents are nearly identical and can be prepared mostly by administrative staff). In addition, unlike in a UDRP action, the lawsuit route allows the complainant to make a claim towards statutory damages for cybersquatting (minimum $1000 up to $100000 per domain name). Given the low likelihood that the Defendants will even respond to the complaints, each lawsuit has the strong potential to garner a $100,000 default judgment (albeit a judgment that is more often than not nearly impossible to collect).

Still, even at a price of about $1000 per domain name, one wonders why GNLV wants to invest even that amount of money for some of the domain names it is seeking. All GNLV is doing is preventing other third parties from obtaining a relatively minuscule amount of PPC revenue from the PPC ads showcased on the landing pages for each of these websites. As for the websites involving typosquatting, I continue to maintain that the vast majority of web users looking for GNLV’s GOLDEN NUGGET are saavy enough with respect to internet browsing that they will not be sidetracked by a landing page that offers links to an online casino or other hotel/casino – and will instead recognize their typo and retype the correct URL address or perform a search using one of the more popular internet search engines (which are certainly not fooled by these websites). When all is said and done, GNLV will be the proud owner of several domain names that will likely do very little in promoting the GOLDEN NUGGET brand and will generate very little additional traffic for GNLV's websites (along with very little additional revenue) beyond what GNLV would’ve already had, but which GNLV now will have to continue to pay annual registration fees in order to maintain these domain names. But I guess GNLV considers that fee (along with the fees paid to its lawyers for these sutis) a small price to pay to prevent domainers from making a single penny (literally) off of the GOLDEN NUGGET mark.

[UPDATE (July 26, 2011) -- Ron Coleman's Likelihood of Confusion® blog provides his response to my query here -- along with a shameless proposal to the people at the Golden Nugget to "handle their cost-effectiveness-be-damned domain trademark enforcement programs."]

Egg Works Loses 9th Circuit Appeal Despite No Opposition From Egg World

The owners of the Las Vegas breakfast restaurants The Egg & I and Egg Works got another dose of egg on their face when the Ninth Circuit Court of Appeals affirmed a lower court’s decision to deny the restaurant chain's motion for preliminary injunction that had been sought against a competing Las Vegas restaurant named Egg World (which did not even file any kind of brief in the appeal).

Last June, Bradley Burdsall, along with his two companies Egg Works, Inc. and Egg Works 2, LLC (collectively “Egg Works”), brought a trademark infringement lawsuit against Egg World, LLC, and two of its principals, Gabrijel Krstanovic, and Dejan Debeljak (collectively “Egg World”). See Egg Works, Inc. et al v. Egg World LLC et al, Case No. 10-cv-01013 (D. Nev.). On September 14, 2010, the lower court entered an order denying Egg Works’ Motion for Preliminary Injunction. (a copy of that order can be viewed here). For my previous blog post discussing the lower court’s decision, click here.

Because the counsel of record for Egg World in the lower court case withdrew from the case soon after the court’s decision (the basis for withdraw was a dispute over money – an unfortunate, all too common issue in litigations), Egg Works recognized that if it appealed the court’s denial of its motion for preliminary injunction, the Egg World defendants would probably not file any kind of brief in such an appeal. And so Egg Works filed an appeal to the Ninth Circuit Court of Appeals of the lower court's decision to deny Egg Works’ Motion for Preliminary Injunction. And if the defendants don’t file an any kind of brief in the appeal, Egg Works would easily win, right? Well as this case aptly demonstrates, that’s not necessarily true.

On September 27, 2011, the Ninth Circuit Court of Appeals in an unpublished decision rendered without oral argument (and without the benefit of any kind of briefs from the Egg World defendants) affirmed the Nevada District Court’s decision to deny Egg Works’ Motion for Preliminary Injunction. See Egg Works, Inc., et al v. Egg World LLC, et al, Appeal No. 10-17534 (9th Cir. April 27, 2011) (unpublished). A copy of the decision can be downloaded here.

The decision is fairly straightforward, with the Court of Appeals finding no abuse of discretion on the part of the lower court in denying Egg Works’ Motion for Preliminary Injunction:

The district court correctly identified the legal standard for likelihood of confusion of a trademark, its findings were not clearly erroneous, and the district court did not clearly err in finding no likelihood of confusion concerning appellants’ trademark. See AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979). We conclude that the district court did not abuse its discretion in concluding that appellants failed to meet the requirements to merit preliminary injunctive relief. Accordingly, we affirm the district court’s denial of appellants’ motion for a preliminary injunction.

So where does the case go from here? Well, assuming Egg Works decides not to waste any more money by seeking reconsideration or appealing to the U.S. Supreme Court, the case goes back to Nevada district court and continues to move forward. But with Egg World not currently represented by counsel, Egg Works will now be able to obtain a default and seek a default judgment against thecompany. And Egg Works may try to seek defaults against the individual defendants as well, who have not show any particular interest in continuing the fight in court (even though they did win both at the lower court and on appeal – although admittedly only at an early preliminary stage).

Of course, given that the Egg World restaurant that gave Egg Works so much heartburn last year closed down earlier this year [Comment—I know from firsthand experience that running a restaurant is tough, and probably more so in these economic times], does Egg Works really want to continue to spend legal fees fighting this out after suffering two battle defeats – even after having essentially won the war at the end of the day? We shall see.

[Full Disclosure: My law firm has represented one of the Defendants in other legal matters, but did not represent any of the Defendants in this case.]

Caesars Palace Files Declaratory Judgment Action Over OCTAVIUS TOWER

In so many trademark lawsuit stories that grab the media’s attention, the story is often one of a large corporation enforcing its trademark rights against individuals and small businesses in a manner that is often described as “trademark bullying” (but which, of course, from the corporation’s perspective could be seen as zealous protection of the company’s valuable trademark rights). The story behind this lawsuit is quite the opposite – in this case, it is the large corporation that is being bullied (or more accurately, majorly inconvenienced since a large corporation has sufficient resources to fight a legal battle in court) by an individual that is seeking to enforce highly questionable trademark rights.

On April 8, 2011, Caesars World, Inc. (“Caesars”), the owner of the CAESARS PALACE brand of hotel-casinos (including Caesars Palace in Las Vegas), filed a declaratory judgment action against a German man named Marcel July and his Nevada limited liability company, Octavius Tower LLC, based on the defendants claims to have exclusive ownership rights to the mark OCTAVIUS TOWER and demands that Caesars stop using the name in connection with a hotel tower. See Caesars World, Inc. v. July et al, Case No. 11-cv-00536 (D. Nev. April 8, 2011). A copy of the complaint (with exhibits) can be downloaded here.

Back in 2007, Caesars World’s parent company, Harrah’s Entertainment, Inc. (which has since been renamed Caesars Entertainment Corporation) announced a $1 billion expansion of the Caesars Palace Hotel-Casino in Las Vegas. One of the new hotel towers built as part of the expansion was going to be named the “Octavius Tower” (going along with Caesars “Roman” themed hotel/casino – presumably named after Julius Caesar’s adopted nephew, Gaius Octavius [for you Roman history scholars, feel free to correct me]).

The Octavius Tower at Caesars Palace in Las Vegas

Two days after Caesars’ announcement regarding its plans to build Octavius Tower, Mr. July, being the enterprising fellow that he appears to be, decided to registered several domain names such as octaviustowercom; octaviustowers.com; octaviustowerlasvegas.com; and octaviustowerslasvegas.com. The same day, July also registered the domain namescaesarstower.com; caesarstowers.com; caesarspalacetower.com; caesarspalacetowers.com; and caesarspalacetowerslasvegas.com. The websites at those domain names promoted that “The new Caesars Palace Towers are Coming Soon” and that the domain names were for sale (see Exhibit B of the Complaint). Caesars filed domain name arbitration actions against July under the UDRP with respect to those domain names that incorporated the mark Caesars Palace (but chose not to go after the Octavius Tower domain names without any trademark registration). The domain names were transferred to Caesars after the arbitrator determined that the domain names had been registered in bad faith. See Caesars World, Inc. v Marcel July Ra Christian Kaldenhoff, Nat'l Arb. Forum, FA 0801001126341 (March 3, 2008).

On July 20, 2007, Caesars filed its own intent-to-use application for the mark OCTAVIUS TOWER for “hotel services.” The application was allowed by the PTO on January 29, 2008; however, because of well-publicized construction delays due to lack of funding after the major downturn in the economy (see news articles here and here), Caesars was not able to provide a Statement of Use before the January 29, 2011 deadline and the application went abandoned (although Caesars, anticipating that its original application would go abandon, filed a new application on December 10, 2010).

Of course, what happened during the interim? Mr. July filed his own trademark registration applications with the PTO for the mark Octavius Tower in connection with entertainment services – specifically on May 7, 2008, July filed for the mark OCTAVIUS TOWER for “Entertainment services, namely, providing a web site featuring musical performances, musical videos, related film clips and photographs”. A registration was issued September 1, 2009. [Query—given that Caesars was already aware of Mr. July propensity for opportunism as illustrated by his domain name registrations and the fact that the marks were identical, why didn’t Caesar file an Opposition against Mr. July’s applications when it had the chance?] On July 23, 2009, July filed a second application for OCTAVIUS TOWER for “Entertainment in the nature of visual and audio performances, and musical, variety, news and comedy shows; Presentation of live show performances; Theatrical and musical floor shows provided at discotheques and nightclubs; Theatrical and musical floor shows provided at performance venues.” A registration for this second application issued on January 12, 2010. In addition to these federal registrations, July also filed three Nevada state trademark registrations for the mark OCTAVIUS TOWER in connection with entertainment services (here, here, and here) as well as a Florida trademark registration. Caesars alleges in its complaint that July has not used the mark in connection with any of the entertainment services identified in the registration (while I have not reviewed the specimens of use submitted by July in order to get his marks registered, I would not be surprised if they are questionable on their face).

Given that the PTO allowed Mr. July’s applications to register despite Caesars pending application for OCTAVIUS TOWER for hotel services, one would naturally not expect Caesars second application for OCTAVIUS TOWER to encounter any objections from the PTO, right? Wrong. On February 24, 2011, the PTO issued a non-final office action rejecting Caesars new application on the basis of a likelihood of confusion with Mr. July’s registration. So what did Mr. July do once he learned of the rejection? He got an attorney to send a cease and desist letter to Caesars (see Exhibit D of the Complaint) demanding that Caesars stop using Mr. July’s “trademarked name” Octavius Tower in any manner and threatening to pursue “all legal remedies available to him.” Caesars counsel wrote back on March 21, 2011, arguing no likelihood of confusion and offering to enter into a coexistence agreement. On March 23, 2011, July’s attorney later wrote back rejecting the coexistence agreement and reiterating the threat to take legal action. Subsequently, July purportedly modified his website at http://www.octaviustower.com/ to add a page that includes Caesars' 2007 announcement of its plan to launch Octavius Tower and includes copies of the correspondence July’s counsel sent to Caesars along with the message to the public about Caesars “infringement” of July’s trademark rights:

Public awareness of this unacceptable corporate behavior is crucial to eradicating it and we are asking you to take a stand and make a difference on this issue. Your collective voice is more compelling than the lobbying power of corporate giants and it is a voice that cannot be ignored. Together we can make a difference and help keep our freedom intact, for us, for our children, and for our grandchildren.

Caesars, recognizing its opportunity to file a declaratory judgment action against Mr. July in order to redress this mess, filed the instant action. In addition to seeking declarations of non-infringement of Mr. July’s trademark rights, Caesars also seeks to cancel July’s federal and state trademark registrations on the basis of non-use and fraud.

So with all of Mr. July’s talk about enforcing his trademark rights, we shall see how important those marks truly are to him and how strongly he feels about his trademark rights (and the strenghth of such rights). Too many individuals seem to have this impression that registration of a particular mark is the end-all-be-all for solidifying exclusive rights to a particular term. But registration is merely prima facie evidence of trademark rights. If you don't actually have any underlying trademark rights to a mark (i.e., some associated goodwill that the consuming public associates with your mark and thegoods/serivces sold using the mark), then you will not be entitled to make a claim of exclusive rights to a term (especially against a third party using the mark in connection with a substantially differnet good or service).

And while I suspect that Mr. July may try to turn this dispute into a "David vs. Goliath" battle (as reflected by his website) of a large corporation using its corporate power and the legal system to steal his valuable trademark, this is one time where I side with the big company.

My Sentiments Exactly. . . .

The title of this blog post by Ron Coleman on his Likelihood of Confusion® blog says it all (along with a snazzy new blog layout).

And let this be a reminder to all of us to review those blogrolls on occasion to see which ones remain active and which ones have long since given up the grind that is blogging (and in doing so, I hope that you will consider this blog as an “active” one despite the infrequency of blog posts as of late).

Casey’s Challenges Subway's Trademark Claim to FOOTLONG

As has been reported widespread in the media, last week, Casey's General Stores, Inc. (“Casey’s”), the owner of the convenience store chain Casey's General Store, filed a declaratory judgment action in Iowa federal district court against Doctor’s Associates, Inc. (“Subway”), the owner of the sandwich shop franchise Subway, seeking a declaration that the term “FOOTLONG” is generic when used in connection with a “footlong submarine sandwich” and thus Casey’s use of the term does not violate any trademark rights owned by Subway. See Casey's General Stores, Inc. v. Doctor's Associates Inc., Case No. 11-cv-00064 (S.D. Iowa February 11, 2011).

DuetsBlog provides a good blog post on the lawsuit filing (including a link to the complaint here). Other news coverage here, here, and here. Other blog coverage from Lawyers and Settlements and Trademarks and Brands.

Casey’s receipt of a cease and desist letter from Subway on January 31, 2011, regarding Subway’s claim over the FOOTLONG term apparently prompted Casey’s to file the action. In the complaint, Casey’s notes that in another pending lawsuit by Subway against convenience store chain Sheetz Inc. (see Doctor's Associates Inc. v. Sheetz Inc. et al, Case No. 09-cv-00088 (E.D. Va.)), the Court denied Subway’s early motion for a preliminary injunction and in doing so made the comment that the term “footlong” is “certainly generic.”

The complaint also notes that with respect to at least one of Subway’s applications for FOOTLONG (for restaurant services), the PTO has refused registration on the grounds that the mark is merely descriptive. In the PTO’s most recent Office Action (which included over 700 pages of exhibits), not only does the PTO note that the term “footlong” is commonly used, not only as an adjective to describe the size of sandwiches but also as a noun generically to refer to the sandwich itself and stating “Being potentially generic for applicant’s menu item, the mark FOOTLONG is highly descriptive for applicant’s restaurant services.” The PTO also noted numerous other restaurant menus, restaurant webpages, recipes, and articles using the term “footlong” to describe sandwiches and hot dogs that are one foot long and concluding that “Clearly, the evidence shows that the mark is and has been widely used descriptively, if not generically, in the food and restaurant industries for many years.”

Of course, as noted by DuetsBlog, the real question is how did Subway ever get its other FOOTLONG application (for sandwiches) to the publication phase? Numerous oppositions have been filed by companies including Long John Silvers, A&W, Taco Bell, Kentucky Fried Chicken, Dairy Queen, and Pizza Hut – with all but one suspended. The opposition that appears to be moving along is (not so coincidentally) the opposition filed by Sheetz. See Sheetz of Delaware, Inc. v. Doctor’s Associates, Inc., Opposition No. 91192657 (T.T.A.B.)

As for how the FOOTLONG application for "sandwiches" ever got the past the examination phase to the publication phase, not even the prosecution history provides a clear answer on that. In response to a descriptiveness refusal by the PTO, Subway merely argued “When applying the mark FOOTLONG to sandwiches it would require imagination, thought or perception to reach a conclusion as to the nature of those goods or services.” Subway added some sales figures in its Office Action response in order to make a claim for acquired distinctiveness if needed – but it never became an issue because the PTO, after dealing with the refusal discussed below, simply moved the application along to the publication phase.

Interestingly, it was not a descriptiveness refusal, but rather a likelihood of confusion refusal, that was Subway’s primary obstacle towards publication of its FOOTLONG application. In the PTO's office action, the Examining Attorney also cited the registered marks FOOTLONG EXPRESS (here and here) in support of a likelihood of confusion rejection. Subway was only able to get its application approved after winning by default cancellation actions against the marks FOOTLONG EXPRESS. See Doctor’s Associates, Inc. v. Skyline Chili, Inc., Cancellation No. 92050678 (T.T.A.B.).

But even after the cited marks had been canceled, the Examining Attorney still received a 72 page Letter of Protest on July 24, 2009 (which would have only been forwarded to the Examining Attorney if the PTO felt that the information raised important issues for the Examining Attorney to consider). While there is a notation in the file that the evidence was reviewed, the application was still forwarded for publication (and the approval itself would have certainly undergone the usual supervisory review, so the approval cannot be blamed on a single Examining Attorney). The rest is history (in the making). One suspects that the PTO, recognzing its mistake to have approved for publication the "sandwiches" application, went above and beyond in order to support its refusal of the "restaurant services" application.

Is there anybody out there that honestly believes that Subway is going to win this on any level?

Of course, this whole blog post was really just to give me an excuse to mention what I am reminded of when I hear the term “footlong” – a scene from the 80s Tom Hanks comedy “Bachelor Party” involving a male stripper who goes by the name “Nick the Dick.” If you watch this clip (sorry in advance for the 30 sec ad at the beginning) from the movie, at about the 1:30 mark, the lady asks “Is that footlong?” to which the gentleman replies “…and then some.” [A little bit of nostalgia for you Gen-Xers out there. . . in addition to being evidence that consumers recognize the term as a generic reference to the “size” of a “sandwich” (or at least a hot dog anyway).]

Internal Business Dispute Over “The Cupcakery” Trademark Reignites

The Cupcakery is a specialty bakery specializing in baking and selling gourmet cupcakes with locations in Las Vegas and Texas.

On January 14, 2011, Texas resident Ricky Perritt (along with several of his wholly-owned LLCs) filed a lawsuit in the U.S. District Court for the Eastern Distirct of Texas against his niece, Pamela Jenkins, and her Nevada-based company The Cupcakery, LLC (“Cupcakery NV”). See Perritt et al v. The Cupcakery, LLC, et al, Case No. 11-cv-00023 (E.D. Tex. January 14, 2011). A copy of the complaint (with exhibits) can be downloaded here.

The new lawsuit is actually a continuation of an earlier dispute over ownership of “The Cupcakery” that originally arose between Perritt and Jenkins back in September 2009, but which was resolved at that time by a written settlement agreement (attached to the complaint as Exhibit A).

According to the complaint, Cupcakery NV was originally formed by three individuals – Pamela Jenkins, Laura Santo Pietro, and Dawn Kalman – in July 2005 with each owning 1/3 of Cupcakery NV. Jenkins, in order to contribute capital to the new business, purportedly received a $95,000 loan from her uncle, Perrit. Jenkins later sought to borrow additional money from Perritt in order to allow Jenkins to buy-out the interests in Pietro and Kalman. Perritt agreed to pay the funds but only if Jenkins assigned over the 2/3 combined interests of Pietro and Kalman to Perritt. Perritt and Jenkins entered into an Agreement on April 20, 2007, which assigned over Pietro’s and Kalman’s 2/3 interests in Cupcakery NV to Perritt.

When Jenkins later proposed opening a second store in Las Vegas, Perritt loaned an additional $187,500 to Cupcakery NV. That stored opened in January 2008. Thereafter, Perritt, with the full knowledge of Jenkins, decided to open up his own “The Cupcakery” stores – first in Frisco, Texas (owned by the Texas based, and co-Plaintiff ,The Cupcakery, LLC), and then a second store in Dallas, Texas (owned by co-Plaintiff Buster Baking, LLC), and later a third store in The Woodlands, Texas (owned by co-Plaintiff The Woodlands Baking, LLC). Perritt’s Texas stores used the same name, recipes and other intellectual property used by Cupcakery NV.

In September 2009, Perritt and Jenkins became embroiled in a dispute over ownership of “The Cupcakery,” which led to Perritt filing a lawsuit against Jenkins in Texas. Jenkins never answered the suit, but through counsel, a settlement agreement was reached in late October 2009 whereby Perritt transferred of his interests in Cupcakery NV to Jenkins in return for receiving an undivided 50% interest in all trademarks, tradenames, and intellectual property owned by the Jenkins and Cupcakery NV with respect to the cupcake business. Jenkins also gave up any interests she might in the Perritt-owned LLCs. Perritt also had the exclusive right for four years to develop additional “Cupcakery” stores in all states except Nevada. The settlement agreement also established that, with respect to the website thecupcakery.com, all inquiries outside of Nevada would go to Perritt and all inquiries inside of Nevada would go to Jenkins.

The end result of the settlement agreement was that Jenkins received 100% of the stores in Nevada and Perritt received 100% of the stores in Texas (along with the exclusive right for four years to develop additional “Cupcakery” stores in all states except Nevada). Perritt and Jenkins individually would own an undivided 50% interest in all THE CUPCAKERY trademarks, tradenames and intellectual property and both agreed to conduct business in a manner consisting with protecting the marks and to work together to maintain the website for The Cupcakery.

According to the latest complaint, Jenkins has become dissatisfied with the settlement agreement and has acted in a manner in breach of the settlement agreement. Specifically, Perritt alleges that Jenkins has supposedly refused to pay her share of legal expenses advanced by Perritt (approx. $8000) that were incurred by the business in pursuing a lawsuit against a third party regarding the “Cupcakery” name (perhaps referring to the “Sift: A Cupcakery” dispute previously blogged about here and here and here?). Perritt also claims that Perkins has stated that she will “not pay any monies or take any measures necessary” to protect the intellectual property and “will give the right to use the name to third parties without consideration of any sort” [ed.—probably a little bit of an exaggeration].

The complaint also alleges that Jenkins, claiming ownership and control over the website “TheCupcakery.com,” told Perritt on January 12, 2011, that she is going to pull down the website on January 17, 2011, and that Perritt must create his own website. Perritt’s position is that he owns a 50% undivided interest in all the intellectual property of “The Cupcakery” including the website and that to switch websites from the one website that gets the most hits when “Cupcakery” is entered on any search engine would cause substantial and irreparable harm to his business. Perritt also maintains that since website inquiries outside the State of Nevada are directed to him, he will be unable to communicate with potential investors, franchisees, or licensees if the website is down for any length of time.

Perritt seeks a temporary restraining order enjoining Jenkins from changing or interfering with the current website pending a hearing on Perritt’s motion for preliminary injunction. Perritt also seeks a declaratory judgment that he owns an undivided 50% interest in the intellectual property of The Cupcakery, that Jenkins is obligated to pay 50% of the attorneys fees and costs associated with protecting The Cupcakery’s intellectual property rights, and that Jenkins cannot modify the website without Perritt’s consent. Finally, Perritt sets forth causes of action for breach of contract, breach of duty of loyalty, and breach of fiduciary duty.

Comment: One wonders if the parties genuinely thought that the co-ownership of the “The Cupcakery” intellectual property rights worked out as part of their 2009 settlement agreement was really going to work in the long term.

UPDATES:

Las Vegas Sun coverage: Website at center of The Cupcakery legal dispute (Steve Green, January 18, 2011).

In a very interesting and surprising twist, on January 19, 2011, Pamela Jenkins, the public face for The Cupcakery (at least in Las Vegas) issued her own press release which seems to announce that she is no longer claiming any exclusive trademark rights to the term CUPCAKERY in connection with a cupcake bakery:

Through research, I've found that the word cupcakery existed before I opened The Cupcakery. I believe the use of cupcakery as a noun can only maximize the exposure for myself and others who believe in the delicious spirit of cupcakes and cupcakeries. It is not, and never has been, my intent to limit the use of the word cupcakery or purport to own the word, as my former partner is attempting to do. As I have received numerous requests nationwide regarding the phenomenon of cupcakes, the word cupcakery and other cupcake-related questions of late, I felt it was the right time to share the glory of The Cupcakery and all cupcakeries freely.

Las Vegas Sun coverage: Cupcakery owner hoping for an end to trademark disputes (Steve Green, January 20, 2011).

Jenkins’ statement then prompted her uncle to seek another TRO to stop her from talking, which was promptly denied (link to amended TRO application and court denial here).

Las Vegas Sun coverage: Cupcakery legal battle escalates with request for gag order (Steve Green, January 27, 2011).